The Dow Is Close to 50,000. How the Heck Did We Get Here So Fast?

Hats at the New York Stock Exchange commemorating milestones of the Dow Jones Industrial Average. (Getty Images)

Key Points

• The Dow Jones Industrial Average took 103 years to reach 10,000, in 1999, after starting at 40.94 in 1896.
• Milestones at 20,000, 30,000, and 40,000 occurred in rapid succession starting in 2017, with decreasing fanfare.
• The Dow is now approaching 50,000, with annualized gains of 6.4% from 10,000 in 1999.

The first million is the hardest, the rich like to say.

For the Dow Jones Industrial Average, now approaching the historic 50,000 level, the first 10,000 was the hardest.

It took a 103-year slog through market crashes, depression, and crippling inflation to reach that “once-unthinkable milestone,” as The Wall Street Journal called it on March 30, 1999.

“Dow Industrials Top 10,000,” the Journal proclaimed across the top of page one that day, as did newspapers across the nation. “Longest Bull Market on Record Smashes a Historic Barrier.”

The milestones that fell at 20,000, 30,000, and 40,000, coming in rapid succession beginning in 2017, were greeted with progressively less fanfare. The significance of the Dow, once the heartbeat of Wall Street, was also questioned.

Now, as Dow 50,000 approaches, faster than ever, it stands as a symbol of what some consider a roaring bull market built on the revolutionary potential of artificial intelligence. Others believe it’s a historic bubble.

Either way, 50,000 is too big and round to ignore, a standout even in a season of round numbers (Nvidia hitting $5 trillion in market capitalization, the S&P 500 nearing 7000).

It is a number Charles Dow could hardly have imagined for the industrial average he established on May 26, 1896, with 12 stocks. Their share prices, averaged out, came to 40.94. A railroad-heavy precursor, started 12 years earlier, evolved into the Dow Jones Transportation Average.

The industrials first surpassed 100 on Jan. 12, 1906, to little notice. In those days, the “Daily Movement of Averages” was a small table lost among the numbers on the Journal’s page seven (of eight).

The Dow hit a 381.17 high on Sept. 3, 1929, reaching what Yale economist Irving Fisher said “looks like a permanently high plateau.”

The stock market crashed in October.

The Dow tumbled all the way down to a postcrash low of 41.22 in 1932, barely above its 1896 starting mark. The high wasn’t regained until 1954.

Twenty-eight years later, on Nov. 14, 1972, the Dow finally crossed the 1,000 threshold after testing it numerous times. The reception was tepid, reflecting those inflationary times.

“The Dow Tops 1000, But That Tells Little About Past or Future,” was The Wall Street Journal’s page one headline.

Investors greeted Dow 1000 with “about the same degree of enthusiasm they’d accord news of a record run in cricket,” Alan Abelson wrote in the Up & Down Wall Street column in Barron’s.

But inflation was tamed by the early ’80s, setting loose a bull market that pushed the DJIA to 5000 by 1995 and—supercharged by the dot-com boom—over 10,000 just four years later, on March 29, 1999.

This was big news across the country.

“Optimism propels Dow past the magic mark,” the South Florida Sun Sentinel wrote the next day.

“Where to now, mighty Dow?” asked the Austin American-Statesman of Texas.

The boldest prediction was Dow 36,000, a best seller that captured the “irrational exuberance” of the market that Fed Chairman Alan Greenspan had warned of a few years earlier.

There were skeptics, among them Robert Shiller, another Yale economist, who suggested that valuations were stretched.

“It is certainly plausible the Dow will not be above 10,000 in 20 years,” Shiller told USA Today.

Shiller looked prescient during the dot-com bust that was just around the corner, and the 2007-09 recession, when 10,000 failed to hold. The Dow plummeted to a post-recession low of 6547.05 on March 9, 2009.

It got back to 10,000 in October 2009, to great relief.

“Whew! Dow closes above 10,000,” the El Paso Times of Texas wrote of “Wall Street’s comeback.”

This time, the market wouldn’t look back, reaching 15,000 by 2013 and racing to 20,000 four years later, on Jan. 25, 2017. Though the result of “a remarkable rally,” as the Journal put it, Dow 20,000 didn’t get the conquering-hero treatment.

“Fake news,” Financial Times columnist John Authers called it. He was among a growing chorus arguing that the Dow no longer represented the market due to its methodology, with just 30 stocks weighted by adjusted share-price average.

Most news sources treated the milestone as an afterthought. Barron’s, however, was looking ahead. “Next Stop: Dow 30,000,” was the magazine’s cover story on Jan. 30, 2017. “[T]here’s no reason the Dow Jones Industrial Average can’t exceed 30,000 by the year 2025.”

In fact, it came five years earlier.

The Dow was racing toward 30,000 in February 2020 when news broke of a deadly new virus sweeping the globe. Covid-19 would have a devastating effect on all aspects of American life, and the stock market wasn’t exempt.

The Dow suffered two of its six-largest single-day percentage drops during the crash, shedding nearly 13% on March 16 and 10% on March 12. It fell to a postpandemic low of 18,591.93 on March 23.

Yet, despite the magnitude of the declines—the rest of Dow’s top six single-day drops include three sessions from 1929 and Black Monday of Oct. 19, 1987—the recovery was swift.

“Dow crests 30,000 points on vaccine hopes, Biden transition,” the Sioux City Journal of Iowa wrote on Nov. 25, 2020, in its page D1 article.

The focus this time wasn’t on the legitimacy of the Dow. It was on the meteoric speed and power of the rally, happening despite deaths, lockdowns, and other consequences of the still-spreading virus.

“Investors have become uninterested in worrying about downside risks,” wrote Tobias Levkovich, chief U.S. equity strategist at Citigroup.

Barron’s didn’t make a 40,000 prediction, and that milestone took only another 3½ years to reach, on May 17, 2024. The achievement didn’t even win headlines in many places. The May 20, 2024, print issue of Barron’s noted it on page 9, in its Review & Preview section.

Considering that the Dow 50,000 is coming into view in something like half the time it took to go from 30,000 to 40,000, it’s hard to see Wall Street breaking out the Champagne for this one, either. That’s especially so since the gains from 10,000 in 1999 to 50,0000 now would work out to just 6.4% annualized, below the norm for stocks.

But if the recent pace keeps up, even Dow 100,000 could be here in a few years. Maybe it will take Dow 1,000,000 to really create some excitement.

After all, the first million is the hardest.

Write to editors@barrons.com